Diluted Earnings Per Share Rises 83% to $.42
Net Orders Increase 16% to 2,508; Net Order Value Up 20% to $930
Million
LOS ANGELES--(BUSINESS WIRE)--
KB Home (NYSE: KBH) today reported results for its third quarter ended
August 31, 2016.
"We are very pleased with our third quarter results, as we continued our
trajectory of solid earnings performance for the year," said Jeffrey
Mezger, chairman, president and chief executive officer. "Our execution
on our core strategies was the primary catalyst for our double-digit
growth in deliveries and housing revenues, and our significantly
improved operating income margin, all of which helped drive an 83%
increase in earnings per share. Moving forward, we intend to maintain
our balanced approach centered on expanding our revenues and operating
income margin, while sharpening our focus on increasing our asset
efficiency in order to generate higher returns on invested capital."
"Housing market conditions remain healthy, with positive employment,
higher household income and economic trends supporting steady consumer
demand amid constrained supply," said Mezger. "In this environment, we
believe we have the strategies in place to strengthen and leverage our
growth platform to expand our business and increase market share across
our current geographic footprint."
Three Months Ended August 31, 2016 (comparisons
on a year-over-year basis)
-
Total revenues of $913.3 million increased 8%, with housing revenues
up 14%.
-
There were no revenues from land sales, compared to $41.6 million.
-
Deliveries grew 11% to 2,487 homes, reflecting double-digit increases
in the Company's West Coast and Central regions.
-
Average selling price increased 2% to $365,900.
-
Housing gross profit margin increased 20 basis points to 16.4%.
-
Excluding inventory-related charges of $3.1 million, housing gross
profit margin rose to 16.8%.
-
Adjusted housing gross profit margin, which excludes the
amortization of previously capitalized interest and
inventory-related charges, improved 10 basis points to 21.2%.
-
Selling, general and administrative expenses improved 110 basis points
to 10.8% of housing revenues.
-
Homebuilding operating income increased 43% to $51.5 million.
-
Homebuilding operating income margin improved 140 basis points to
5.7%. Excluding inventory-related charges and prior year land sale
results, homebuilding operating income margin rose 120 basis
points to 6.0%.
-
All interest incurred was capitalized, resulting in no interest
expense as compared to $4.4 million of interest expense.
-
Financial services pretax income decreased 11% to $2.4 million.
-
The Company and Nationstar Mortgage LLC have begun the process of
winding down their mortgage banking joint venture, Home Community
Mortgage, LLC, and transferring Home Community Mortgage's assets
and operations to Stearns Lending, LLC. Currently, Stearns Lending
is offering mortgage banking services to the Company's homebuyers,
and the Company and Stearns Lending are working to establish a new
relationship.
-
Pretax income increased 57% to $53.5 million.
-
Income tax expense of $14.1 million was favorably impacted by $6.7
million of federal energy tax credits earned from building
energy-efficient homes and represented an effective tax rate of 26.4%.
-
Income tax expense for the three months ended August 31, 2015
included the favorable impact of $2.5 million of federal energy
tax credits, which resulted in an effective income tax rate of
31.5%.
-
Net income rose 69% to $39.4 million and earnings per diluted share
increased 83% to $.42.
Nine Months Ended August 31, 2016 (comparisons
on a year-over-year basis)
-
Total revenues increased 17% to $2.40 billion.
-
Land sale revenues totaled $4.2 million, compared to $110.5
million.
-
Housing revenues grew 24% to $2.39 billion.
-
Deliveries rose 21% to 6,769 homes.
-
Average selling price increased 3% to $353,100.
-
Homebuilding operating income rose 41% to $96.4 million.
-
Net income increased 68% to $68.1 million and earnings per diluted
share advanced to $.72 from $.42.
Backlog and Net Orders (comparisons on a
year-over-year basis)
-
Ending backlog value grew 17% to $1.85 billion, reflecting increases
in all of the Company's regions.
-
Homes in backlog rose 12% to 5,226.
-
Net order value for the quarter grew 20% to $929.6 million.
-
Net orders for the quarter increased 16% to 2,508.
-
The cancellation rate as a percentage of beginning backlog for the
quarter improved to 19% from 20%, and as a percentage of gross orders
improved to 29% from 30%.
-
Average community count for the quarter decreased 9% to 235.
Balance Sheet (as of August 31, 2016)
-
Cash, cash equivalents and restricted cash totaled $335.3 million.
-
Inventories totaled $3.60 billion, with investments in land
acquisition and development totaling $1.06 billion for the nine months
ended August 31, 2016.
-
Lots owned or controlled totaled 46,636, of which 81% were owned.
-
There were no cash borrowings outstanding under the unsecured
revolving credit facility.
-
Average diluted shares outstanding for the quarter were reduced 7%
from the year-earlier quarter to 95.2 million, reflecting repurchases
of nearly 8.4 million shares of common stock during the 2016 first
quarter at a total cost of $85.9 million. No shares were repurchased
in the 2016 second or third quarters.
Earnings Conference Call
The conference call to discuss the Company's third quarter 2016 earnings
will be broadcast live TODAY at 2:00 p.m. Pacific Time, 5:00 p.m.
Eastern Time. To listen, please go to the Investor Relations section of
the Company's website at www.kbhome.com.
About KB Home
KB Home (NYSE: KBH) is one of the largest and most recognized
homebuilders in the United States and an industry leader in
sustainability, building innovative and highly energy- and
water-efficient new homes. Founded in 1957 and the first homebuilder
listed on the New York Stock Exchange, the Company has built nearly
600,000 homes for families from coast to coast. Distinguished by its
personalized homebuilding approach, KB Home lets each buyer choose their
lot location, floor plan, décor choices, design features and other
special touches that matter most to them. To learn more about KB Home,
call 888-KB-HOMES, visit www.kbhome.com or
connect on Facebook.com/KBHome
or Twitter.com/KBHome.
Forward-Looking and Cautionary Statements
Certain matters discussed in this press release, including any
statements that are predictive in nature or concern future market and
economic conditions, business and prospects, our future financial and
operational performance, or our future actions and their expected
results are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based on current expectations and projections about
future events and are not guarantees of future performance. We do not
have a specific policy or intent of updating or revising forward-looking
statements. Actual events and results may differ materially from those
expressed or forecasted in forward-looking statements due to a number of
factors. The most important risk factors that could cause our actual
performance and future events and actions to differ materially from such
forward-looking statements include, but are not limited to the
following: general economic, employment and business conditions;
population growth, household formations and demographic trends;
conditions in the capital, credit and financial markets; our ability to
access external financing sources and raise capital through the issuance
of common stock, debt or other securities, and/or project financing, on
favorable terms; material and trade costs and availability; changes in
interest rates; our debt level, including our ratio of debt to capital,
and our ability to adjust our debt level and maturity schedule; our
compliance with the terms of our revolving credit facility; volatility
in the market price of our common stock; weak or declining consumer
confidence, either generally or specifically with respect to purchasing
homes; competition from other sellers of new and resale homes; weather
events, significant natural disasters and other climate and
environmental factors, including the severe prolonged drought and
related water-constrained conditions in the southwest United States and
California; government actions, policies, programs and regulations
directed at or affecting the housing market (including the Dodd-Frank
Act, tax benefits associated with purchasing and owning a home, and the
standards, fees and size limits applicable to the purchase or insuring
of mortgage loans by government-sponsored enterprises and government
agencies), the homebuilding industry, or construction activities; the
availability and cost of land in desirable areas; our warranty claims
experience with respect to homes previously delivered and actual
warranty costs incurred; costs and/or charges arising from regulatory
compliance requirements or from legal, arbitral or regulatory
proceedings, investigations, claims or settlements, including
unfavorable outcomes in any such matters resulting in actual or
potential monetary damage awards, penalties, fines or other direct or
indirect payments, or injunctions, consent decrees or other voluntary or
involuntary restrictions or adjustments to our business operations or
practices that are beyond our current expectations and/or accruals; our
ability to use/realize the net deferred tax assets we have generated;
our ability to successfully implement our current and planned strategies
and initiatives related to our product, geographic and market
positioning (including our plans to transition out of the Metro
Washington, D.C. area), gaining share and scale in our served markets;
our operational and investment concentration in markets in California;
consumer interest in our new home communities and products, particularly
from first-time homebuyers and higher-income consumers; our ability to
generate orders and convert our backlog of orders to home deliveries and
revenues, particularly in key markets in California; our ability to
successfully implement strategic and operational initiatives that will
enable us to expand revenues and our operating income margin, increase
our asset efficiency and generate higher returns on invested capital;
the ability of our homebuyers to obtain residential mortgage loans and
mortgage banking services; the performance of mortgage lenders to our
homebuyers; completing the wind-down of Home Community Mortgage as
planned, and the management of its assets and operations during the
wind-down process; whether we can establish a joint venture or other
relationship with a mortgage banking services provider; information
technology failures and data security breaches; and other events outside
of our control. Please see our periodic reports and other filings with
the Securities and Exchange Commission for a further discussion of these
and other risks and uncertainties applicable to our business.
|
|
|
|
|
|
|
KB HOME
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
For the Nine Months and Three Months Ended August 31, 2016 and 2015
|
|
(In Thousands, Except Per Share Amounts — Unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Total revenues
|
|
$
|
2,402,704
|
|
|
$
|
2,046,247
|
|
|
$
|
913,283
|
|
|
$
|
843,157
|
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,394,315
|
|
|
$
|
2,038,896
|
|
|
$
|
910,111
|
|
|
$
|
840,204
|
|
|
Costs and expenses
|
|
(2,297,908
|
)
|
|
(1,970,654
|
)
|
|
(858,634
|
)
|
|
(804,222
|
)
|
|
Operating income
|
|
96,407
|
|
|
68,242
|
|
|
51,477
|
|
|
35,982
|
|
|
Interest income
|
|
395
|
|
|
342
|
|
|
109
|
|
|
87
|
|
|
Interest expense
|
|
(5,667
|
)
|
|
(17,850
|
)
|
|
—
|
|
|
(4,394
|
)
|
|
Equity in loss of unconsolidated joint ventures
|
|
(1,964
|
)
|
|
(1,180
|
)
|
|
(536
|
)
|
|
(422
|
)
|
|
Homebuilding pretax income
|
|
89,171
|
|
|
49,554
|
|
|
51,050
|
|
|
31,253
|
|
|
Financial services:
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
8,389
|
|
|
7,351
|
|
|
3,172
|
|
|
2,953
|
|
|
Expenses
|
|
(2,621
|
)
|
|
(2,802
|
)
|
|
(891
|
)
|
|
(910
|
)
|
|
Equity in income (loss) of unconsolidated joint ventures
|
|
(652
|
)
|
|
3,023
|
|
|
132
|
|
|
658
|
|
|
Financial services pretax income
|
|
5,116
|
|
|
7,572
|
|
|
2,413
|
|
|
2,701
|
|
|
Total pretax income
|
|
94,287
|
|
|
57,126
|
|
|
53,463
|
|
|
33,954
|
|
|
Income tax expense
|
|
(26,200
|
)
|
|
(16,500
|
)
|
|
(14,100
|
)
|
|
(10,700
|
)
|
|
Net income
|
|
$
|
68,087
|
|
|
$
|
40,626
|
|
|
$
|
39,363
|
|
|
$
|
23,254
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
.79
|
|
|
$
|
.44
|
|
|
$
|
.46
|
|
|
$
|
.25
|
|
|
Diluted
|
|
$
|
.72
|
|
|
$
|
.42
|
|
|
$
|
.42
|
|
|
$
|
.23
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
85,952
|
|
|
92,005
|
|
|
84,457
|
|
|
92,065
|
|
|
Diluted
|
|
96,437
|
|
|
101,605
|
|
|
95,203
|
|
|
101,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KB HOME
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(In Thousands — Unaudited)
|
|
|
|
|
|
|
|
|
|
August 31,
2016
|
|
November 30,
2015
|
|
Assets
|
|
|
|
|
|
Homebuilding:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
334,669
|
|
|
$
|
559,042
|
|
Restricted cash
|
|
602
|
|
|
9,344
|
|
Receivables
|
|
149,219
|
|
|
152,682
|
|
Inventories
|
|
3,597,673
|
|
|
3,313,747
|
|
Investments in unconsolidated joint ventures
|
|
61,526
|
|
|
71,558
|
|
Deferred tax assets, net
|
|
756,596
|
|
|
782,196
|
|
Other assets
|
|
113,341
|
|
|
112,774
|
|
|
|
5,013,626
|
|
|
5,001,343
|
|
Financial services
|
|
14,135
|
|
|
14,028
|
|
Total assets
|
|
$
|
5,027,761
|
|
|
$
|
5,015,371
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
|
Homebuilding:
|
|
|
|
|
|
Accounts payable
|
|
$
|
195,785
|
|
|
$
|
183,770
|
|
Accrued expenses and other liabilities
|
|
471,295
|
|
|
513,414
|
|
Notes payable
|
|
2,674,795
|
|
|
2,625,536
|
|
|
|
3,341,875
|
|
|
3,322,720
|
|
Financial services
|
|
3,436
|
|
|
1,817
|
|
Stockholders' equity
|
|
1,682,450
|
|
|
1,690,834
|
|
Total liabilities and stockholders' equity
|
|
$
|
5,027,761
|
|
|
$
|
5,015,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KB HOME
|
|
SUPPLEMENTAL INFORMATION
|
|
For the Nine Months and Three Months Ended August 31, 2016 and 2015
|
|
(In Thousands, Except Average Selling Price — Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Homebuilding revenues:
|
|
|
|
|
|
|
|
|
|
Housing
|
|
$
|
2,390,165
|
|
|
$
|
1,928,395
|
|
|
$
|
910,111
|
|
|
$
|
798,633
|
|
|
Land
|
|
4,150
|
|
|
110,501
|
|
|
—
|
|
|
41,571
|
|
|
Total
|
|
$
|
2,394,315
|
|
|
$
|
2,038,896
|
|
|
$
|
910,111
|
|
|
$
|
840,204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homebuilding costs and expenses:
|
|
|
|
|
|
|
|
|
|
Construction and land costs
|
|
|
|
|
|
|
|
|
|
Housing
|
|
$
|
2,007,621
|
|
|
$
|
1,622,530
|
|
|
$
|
760,490
|
|
|
$
|
668,871
|
|
|
Land
|
|
10,401
|
|
|
103,446
|
|
|
—
|
|
|
40,277
|
|
|
Subtotal
|
|
2,018,022
|
|
|
1,725,976
|
|
|
760,490
|
|
|
709,148
|
|
|
Selling, general and administrative expenses
|
|
279,886
|
|
|
244,678
|
|
|
98,144
|
|
|
95,074
|
|
|
Total
|
|
$
|
2,297,908
|
|
|
$
|
1,970,654
|
|
|
$
|
858,634
|
|
|
$
|
804,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
Interest incurred
|
|
$
|
138,994
|
|
|
$
|
140,789
|
|
|
$
|
46,485
|
|
|
$
|
46,587
|
|
|
Interest capitalized
|
|
(133,327
|
)
|
|
(122,939
|
)
|
|
(46,485
|
)
|
|
(42,193
|
)
|
|
Total
|
|
$
|
5,667
|
|
|
$
|
17,850
|
|
|
$
|
—
|
|
|
$
|
4,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
8,431
|
|
|
$
|
8,413
|
|
|
$
|
2,829
|
|
|
$
|
2,853
|
|
|
Amortization of previously capitalized interest
|
|
106,663
|
|
|
99,488
|
|
|
40,424
|
|
|
51,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average selling price:
|
|
|
|
|
|
|
|
|
|
West Coast |
|
$
|
572,100
|
|
|
$
|
571,500
|
|
|
$
|
583,300
|
|
|
$
|
579,800
|
|
|
Southwest
|
|
286,400
|
|
|
279,500
|
|
|
287,800
|
|
|
285,200
|
|
|
Central
|
|
265,900
|
|
|
244,600
|
|
|
272,100
|
|
|
256,000
|
|
|
Southeast
|
|
279,700
|
|
|
278,100
|
|
|
287,600
|
|
|
287,300
|
|
|
Total
|
|
$
|
353,100
|
|
|
$
|
343,400
|
|
|
$
|
365,900
|
|
|
$
|
357,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KB HOME
|
|
SUPPLEMENTAL INFORMATION
|
|
For the Nine Months and Three Months Ended August 31, 2016 and 2015
|
|
(Dollars in Thousands — Unaudited)
|
|
|
|
|
|
|
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Homes delivered:
|
|
|
|
|
|
|
|
|
|
West Coast |
|
1,799
|
|
|
1,498
|
|
|
710
|
|
|
625
|
|
Southwest
|
|
1,111
|
|
|
888
|
|
|
369
|
|
|
372
|
|
Central
|
|
2,647
|
|
|
2,212
|
|
|
976
|
|
|
822
|
|
Southeast
|
|
1,212
|
|
|
1,018
|
|
|
432
|
|
|
417
|
|
Total
|
|
6,769
|
|
|
5,616
|
|
|
2,487
|
|
|
2,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net orders:
|
|
|
|
|
|
|
|
|
|
West Coast |
|
2,325
|
|
|
1,886
|
|
|
775
|
|
|
564
|
|
Southwest
|
|
1,337
|
|
|
1,305
|
|
|
437
|
|
|
384
|
|
Central
|
|
3,042
|
|
|
2,864
|
|
|
931
|
|
|
818
|
|
Southeast
|
|
1,325
|
|
|
1,316
|
|
|
365
|
|
|
401
|
|
Total
|
|
8,029
|
|
|
7,371
|
|
|
2,508
|
|
|
2,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net order value:
|
|
|
|
|
|
|
|
|
|
West Coast |
|
$
|
1,346,091
|
|
|
$
|
1,088,175
|
|
|
$
|
435,598
|
|
|
$
|
331,864
|
|
Southwest
|
|
385,501
|
|
|
368,394
|
|
|
122,876
|
|
|
110,181
|
|
Central
|
|
845,164
|
|
|
758,592
|
|
|
263,707
|
|
|
223,168
|
|
Southeast
|
|
380,509
|
|
|
364,169
|
|
|
107,408
|
|
|
108,075
|
|
Total
|
|
$
|
2,957,265
|
|
|
$
|
2,579,330
|
|
|
$
|
929,589
|
|
|
$
|
773,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2016 |
|
August 31, 2015 |
|
|
|
Backlog Homes |
|
Backlog Value
|
|
Backlog Homes |
|
Backlog Value
|
|
Backlog data:
|
|
|
|
|
|
|
|
|
|
West Coast |
|
1,264
|
|
|
$
|
724,795
|
|
|
981
|
|
|
$
|
586,862
|
|
Southwest
|
|
831
|
|
|
234,736
|
|
|
741
|
|
|
204,802
|
|
Central
|
|
2,237
|
|
|
636,234
|
|
|
2,141
|
|
|
571,433
|
|
Southeast
|
|
894
|
|
|
252,815
|
|
|
801
|
|
|
222,381
|
|
Total
|
|
5,226
|
|
|
$
|
1,848,580
|
|
|
4,664
|
|
|
$
|
1,585,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KB HOME
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
For
the Nine Months and Three Months Ended August 31, 2016 and 2015
(In
Thousands, Except Percentages — Unaudited)
This press release contains, and Company management's discussion of the
results presented in this press release may include, information about
the Company's adjusted housing gross profit margin and ratio of net debt
to capital, both of which are not calculated in accordance with
generally accepted accounting principles ("GAAP"). The Company believes
these non-GAAP financial measures are relevant and useful to investors
in understanding its operations and the leverage employed in its
operations, and may be helpful in comparing the Company with other
companies in the homebuilding industry to the extent they provide
similar information. However, because the adjusted housing gross profit
margin and the ratio of net debt to capital are not calculated in
accordance with GAAP, these financial measures may not be completely
comparable to other companies in the homebuilding industry and,
therefore, should not be considered in isolation or as an alternative to
operating performance and/or financial measures prescribed by GAAP.
Rather, these non-GAAP financial measures should be used to supplement
their respective most directly comparable GAAP financial measures in
order to provide a greater understanding of the factors and trends
affecting the Company's operations.
Adjusted Housing Gross Profit Margin
The following table reconciles the Company's housing gross profit margin
calculated in accordance with GAAP to the non-GAAP financial measure of
the Company's adjusted housing gross profit margin:
|
|
|
Nine Months Ended August 31,
|
|
Three Months Ended August 31,
|
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Housing revenues
|
|
$
|
2,390,165
|
|
|
$
|
1,928,395
|
|
|
$
|
910,111
|
|
|
$
|
798,633
|
|
|
Housing construction and land costs
|
|
(2,007,621
|
)
|
|
(1,622,530
|
)
|
|
(760,490
|
)
|
|
(668,871
|
)
|
|
Housing gross profits
|
|
382,544
|
|
|
305,865
|
|
|
149,621
|
|
|
129,762
|
|
|
Add: Amortization of previously capitalized interest (a)
|
|
106,181
|
|
|
83,050
|
|
|
40,424
|
|
|
35,314
|
|
|
Inventory-related charges (b)
|
|
10,615
|
|
|
4,516
|
|
|
3,052
|
|
|
3,532
|
|
|
Adjusted housing gross profits
|
|
$
|
499,340
|
|
|
$
|
393,431
|
|
|
$
|
193,097
|
|
|
$
|
168,608
|
|
|
Housing gross profit margin as a percentage of housing revenues
|
|
16.0
|
%
|
|
15.9
|
%
|
|
16.4
|
%
|
|
16.2
|
%
|
|
Adjusted housing gross profit margin as a percentage of housing
revenues
|
|
20.9
|
%
|
|
20.4
|
%
|
|
21.2
|
%
|
|
21.1
|
%
|
(a) Represents the amortization of previously capitalized interest
associated with housing operations.
(b) Represents inventory impairment and land option contract abandonment
charges associated with housing operations.
Adjusted housing gross profit margin is a non-GAAP financial measure,
which the Company calculates by dividing housing revenues less housing
construction and land costs excluding (1) amortization of previously
capitalized interest associated with housing operations and (2) housing
inventory impairment and land option contract abandonment charges
recorded during a given period, by housing revenues. The most directly
comparable GAAP financial measure is housing gross profit margin. The
Company believes adjusted housing gross profit margin is a relevant and
useful financial measure to investors in evaluating the Company's
performance as it measures the gross profits the Company generated
specifically on the homes delivered during a given period. This non-GAAP
financial measure isolates the impact that the amortization of
previously capitalized interest associated with housing operations, and
housing inventory impairment and land option contract abandonment
charges have on housing gross profit margins, and allows investors to
make comparisons with the Company's competitors that adjust housing
gross profit margins in a similar manner. The Company also believes
investors will find adjusted housing gross profit margin relevant and
useful because it represents a profitability measure that may be
compared to a prior period without regard to variability of amortization
of previously capitalized interest associated with housing operations,
and housing inventory impairment and land option contract abandonment
charges. This financial measure assists management in making strategic
decisions regarding community location and product mix, product pricing
and construction pace.
KB HOME
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In
Thousands, Except Percentages — Unaudited)
Ratio of Net Debt to Capital
The following table reconciles the Company's ratio of debt to capital
calculated in accordance with GAAP to the non-GAAP financial measure of
the Company's ratio of net debt to capital:
|
|
|
August 31,
2016
|
|
November 30,
2015
|
|
Notes payable
|
|
$
|
2,674,795
|
|
|
$
|
2,625,536
|
|
|
Stockholders' equity
|
|
1,682,450
|
|
|
1,690,834
|
|
|
Total capital
|
|
$
|
4,357,245
|
|
|
$
|
4,316,370
|
|
|
Ratio of debt to capital
|
|
61.4
|
%
|
|
60.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes payable
|
|
$
|
2,674,795
|
|
|
$
|
2,625,536
|
|
|
Less: Cash and cash equivalents and restricted cash
|
|
(335,271
|
)
|
|
(568,386
|
)
|
|
Net debt
|
|
2,339,524
|
|
|
2,057,150
|
|
|
Stockholders' equity
|
|
1,682,450
|
|
|
1,690,834
|
|
|
Total capital
|
|
$
|
4,021,974
|
|
|
$
|
3,747,984
|
|
|
Ratio of net debt to capital
|
|
58.2
|
%
|
|
54.9
|
%
|
The ratio of net debt to capital is a non-GAAP financial measure, which
the Company calculates by dividing notes payable, net of homebuilding
cash and cash equivalents and restricted cash, by capital (notes
payable, net of homebuilding cash and cash equivalents and restricted
cash, plus stockholders' equity). The most directly comparable GAAP
financial measure is the ratio of debt to capital. The Company believes
the ratio of net debt to capital is a relevant and useful financial
measure to investors in understanding the leverage employed in the
Company's operations.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160920006816/en/
KB Home
Investor Relations:
Jill Peters
310-893-7456
jpeters@kbhome.com
or
Media:
Susan
Martin
310-231-4142
smartin@kbhome.com
Source: KB Home
News Provided by Acquire Media